“The [DOJ] has made progress policing the payments market and the new investigation of Visa is another step in the right direction,” Doug Cantor, a counsel for the MPC, said, according to PYMNTS.com. “Visa should not be able to muscle retailers into paying up-front costs for both credit and debit transactions before they happen.”
The DOJ investigation is focused on aspects of Visa’s debit card business, as well as a new fee being charged in the wake of mounting Dodd-Frank regulations on credit and debit processors. Visa’s new fee would require merchants to pay for unwanted debit and credit cards, financially force the merchant into choosing unwanted cards and reduce merchants’ competitive choice of card network.
Under the Durbin Amendment, a provision of the 2010 Dodd-Frank Act, banks are required to allow more than one card processor to carry transactions, a rule designed to enhance competition to reduce network fees, PYMNTS.com reports.
Tien-tsin Huang, an analyst for JPMorgan Chase & Co., explained the investigation to client investors.
“In a bad-case outcome, Visa may need to alter elements of its strategy,” Huang said, according to BusinessWeek. “The issue may take nine to 24 months to resolve.”
While investor response was evident in a 5.4 percent drop in Visa shares on Thursday, Visa CEO Joe Saunders expressed confidence in the company’s reaction to the DOJ inquest.
“In a business as complex as ours, the [DOJ]’s request is not unexpected,” Saunders said, adding that the DOJ has asked the processor for information four times since 2007, PYMNTS.com reports. “All have been resolved with our full cooperation. We are continuing to provide materials and cooperate with the department.”